Time in the Market Savings Rate Report – April 2018 – My Tax Refund

I’m generally pretty lazy when it comes to taxes and always do them close to the deadline. Luckily, the government is an efficient machine and gets any money owed back to me pretty quickly.

My goal is to owe $0 in taxes at the end of the year. I don’t do anything to achieve that goal besides hope so I’m not very good at meeting it! I was actually successful one year as I basically got $5 back at the end of the year although I don’t know how it happened! Most years, however, I get a tax refund. There’s nothing inherently wrong with that but it’d be better not to give the government a loan.

Last year’s tax refund came in March as I did my taxes earlier. It was just north of $2k and boosted that month’s savings rate to 49.1%. This year, the government gave back my over payment in April. I yelled at them, “IT’S MY MONEY AND I NEED IT NOW“, and they delivered. Thanks Mr. Government. The influx this year wasn’t as big as last year. However, a boost in income in any given month is welcome when I’m trying to maximize my savings rate.

I have some lofty savings rate goals this year and I’m eager to do well in these early months because of my wedding and honeymoon coming up later in the year.

I’ve been doing well so far. January clocked in at 49% and February was at 71% after I got my bonus. March was bad as those dreaded wedding expenses clocked in with a payment for my wedding venue. That means I went into April eager to get back at it especially since I knew the tax refund was likely going to hit this month.

I know I’ll have a few months like March where my savings rate is terrible due to wedding or honeymoon expenses. If I want to hit my goals for the year, I’ll need a lot of months like January and February to boost my overall results.

I did my best to control spending in April so let’s take a look at where I ended up for the month. First, we’ll start with the gross income savings rate.

Gross Income Savings Rate

I saved 44.7% of my gross income this month. That number jumps to 48.7% when I add in employer contributions.

The long term goal here is to save at least 1/3rd of my gross income every year. I’m doing great so far this year and this month continues that trend.

Q1 ended with a 41.5% gross income savings rate and April will bring that number up even higher!

My expenses were actually a bit higher than normal this month but the tax refund made up for that in a big way. It helped me continue the strong start I’ve had throughout this year and recover from the expensive March.

Now, let’s take a look at my savings rate.

Savings Rate

My savings rate for the month is 55.81%. That’s a killer month even considering the tax refund! My refund this year was smaller than in 2017 but my savings rate is almost 7% higher than the refund month in 2017.

Adding in employer contributions brings that number up to 60.77%.

It’s always awesome to be able to save 50% of my overall net income. That’s definitely one of the reasons my portfolio has been doing so well lately. A favorable market doesn’t hurt but continued contributions keep driving both my portfolio and dividend totals up!

After Q1, I was sitting at a 53.2% savings rate so April will boost that number as I start Q2.

The tax refund is a one off event and it’s a weird one when you look at savings rates. In essence, I’m boosting my expenses in the prior period by paying more in taxes to increase my savings rate this year. The best result would to be to manage my tax payments in way where my tax refund is close to 0 but I’ve never pursued such optimization in any significant way. Loaning the government a bit of money at no interest for a short period of time is not ideal but it isn’t the end of the world.

I find enjoyment in optimizing my savings and investments. I don’t find that same enjoyment in taxes so I’ll probably never get into it too much and just deal with the small tax refunds. It’s a lot easier to not care when the end result is a cash infusion around March or April. It might be a fake boost to the savings rate in these months but it works out in the long run. In reality, it should be spread across the year if I was optimizing taxes but I don’t mind just taking it all in one month.

Let’s take a look at my expenses.

Expenses

My tax refund made up 1/4th of my overall income. My primary job made up the rest with a tiny bit of book income continuing to trickle in each month.

I haven’t touched my side hustle of self-publishing stories in a while but it’s still giving me a tiny bit of money each month. I’ve said this for a while but I really have to get back at it and boost that number. It’s just tough to make time between work, social events and this blog. That’s just me being lazy and making excuses but such is life!

On the expense side, savings are #1 in a big way which is always good to see and the goal each month. It didn’t happen last month due to my wedding venue expense but we’re back up there again so that’s nice.

Rent is #2 edging out my car by a little bit. I took advantage of the extra income this month and tossed another $500 at my car loan. The goal is to pay that off by the end of the year and I’m on pace to that. I already tossed another $750 at it in May and now that I’ve got two months in a row with an additional payment, I’m eager to keep that going and pay it off ASAP. It’s got a low interest rate but having no debt would be nice. That extra cash flow would certainly help boost my savings rate going forward too.

Good old groceries are next because people have got to eat. I pretty much shop exclusively at Trader Joe’s which is why my grocery costs are relatively low. Restaurants are next in line with a few visits to some fine dining establishments. We generally only go out to eat once or twice a week. Most times, it’s either brunch on Sunday or dinner if we’re taking a day trip and are far from home.

Internet/Phone, home bills(gas, electricity, etc.), work parking and pet expenses are next.

The next part is a new one as I spent a few $$ on my blog this month! First, I picked up a code for 100 stock photos at DepositPhotos. It was a good price and that’s one of my favorite websites for stock photos. It’s important to make sure you have the license for any photos you may use on your blog or on social media outlets. In order to do that, I either use free stock photo websites or wait for a sale on DepositPhotos and stock up once a year.

On the social media front, I signed up for a BoardBooster account. I’ve heard all sorts of good things about Pinterest as a traffic driver and am dipping my toe in via BoardBooster. It’s only $5 a month and has a ton of options for automating your pins.

A few days after I picked up the DepositPhotos deal. I found a deal on a Serpstat membership and signed up. Serpstat is an SEO platform that I’ll be using to track my site’s SEO performance as well as look up SEO keywords.

I’ve been running this blog on WordPress for almost a year now and really want to become more serious about it. I’m hopeful BoardBooster and Serpstat help me grow a bit more than I have in the past year. Right now, both seem very useful and I’m already seeing positive results from the investments I have made there. One of the things I’d like to take away from this blog is a better understanding of web traffic and SEO. I’m OK with spending a few $$ here and there to make that happen.

At the end of the day. This is not a money making venture for me. It’s more about keeping myself on track and teaching/helping some people along the way. If I can break even between the blog and my meager book income then I’ll be happy. I’m not going crazy with expenses just yet but might get a few more things to play around with in the future. If I ever do make any money, as per the disclosure policy, I plan donate at least 50% of the profits from this blog to charity(probably closer to 100%).

The rest of the stuff is nothing new. Household included stuff like tissues and baby wipes and health was just a few supplements. My sole entertainment this month was Netflix and iTunes. Although, I did see Avengers: Infinity War in theaters with friends and it was great. My fiancee payed for the tickets so that was nice.

Overall, this was a great month. Some expenses here and there but most of the new ones were driven by a desire to do something. I want to expand on my web knowledge and grow my blog so I spent a bit of money to get some services that will help do that. I want to pay off my car loan ASAP so I tossed some extra money towards that this month. My tax refund made a lot of that possible while helping me maintain a really great savings rate.

I’m eager to see where the rest of the year takes me. I have a great start to the year so those months later on when the wedding expense gang surrounds me, beats me up and steals my wallet, will be easier to stomach since I know my annual goals are still within reach.

I find that tracking it combined with setting goals really helps me get into a mindset of saving. Example, last year I was lagging behind towards the latter part of the year so I really hunkered down and thought about my spending and saved a lot helping me hit my goals.

This year, that trend continued since I found that spending less wasn’t actually that hard as I didn’t miss most of the stuff I cut out.

Hi Time,
I couldn’t get past the first paragraph, “the government is an efficient machine”. Are we talking about our federal government? I’m afraid that level of efficiency is going to bury us in public debt and take down the whole system. Deep topic I barely can comprehend and will save it for another day.

Good luck with the blog growth. The SEO tool looks interesting. I just moved from Board Booster to Tailwind and am seeing good traffic results from Pinterest for the first time. Nothing against BB, I don’t think I was using it in the most effective way.

Hi! New reader here. That’s a very impressive savings rate and I have to go back to your blog and look at how you do it. I just started saving as I just started working a year ago. I took it to myself that on my 1st year of working I would spend everything on myself and the next year I would start saving up for the future. Hope to learn a lot from you!

Welcome

I’m 34, a first generation immigrant and I like cheese. I have a dog, a bunny and am saving money. The goal is to the financially independent and have the option to retire by 45 and have fun while doing it.

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